First blockchain-based bank guarantee issued by Russia in Yuan

The first blockchain-based bank guarantee was issued at banks in Russia in the Chinese Yuan. Russian national blockchain network made a transaction through the Masterchain blockchain platform. 

A credit Bank in Moscow declared the product to be the first of its kind in the country by introducing a blockchain-based bank guarantee entitled in the currency of China.

It was stated that they formed a Russian blockchain network for the transfer of digital assets between the participants. The transaction was processed through the Masterchain blockchain platform.

While stating the advantage of the Blockchain-based transaction the institute, it was said that the. “Beneficiary does not need to wait for the paper version and make a separate request to the bank to confirm the authenticity of the issued document.”

This institute proposes a bank guarantee that ensures a safeguard for the finances. The bank signs a contractual agreement beforehand. If a user fails to satisfy the commitment made, the bank agrees to presume the financial responsibility for that transaction.

In order to make sure that the transaction is actually made and the products are delivered according to the commitment, bank guarantees are used for these purposes.

Three parties agree upon a bank guarantee that is generated by the Masterchain blockchain platform. Bank states that “it cannot be faked or lost.” The contracts of the importers are attached to Chinese currency as the currency of the bank guarantee is the Yuan. All the parties will admit to a certain exchange rate at which the recipient will receive Russian rubles if they make a payment under the guarantee.

The director of the MCB’s International and Structured Finance Department stated that:

 “Most foreign trade contracts are serviced in Chinese currency and the demand for payments in yuan is only growing. This is a logical step for the market,  we will see more examples of this in the near future. The decision will be especially relevant for large groups of companies that have many subsidiaries that accept bank guarantees in large quantities and on regular basis.”

On April 1, 2023, a central bank in Russia is also going to introduce its first consumer pilot for its digital currency. It is going to be a part of the country’s already happening crypto development. It is reported that 1e local banks and many merchants will conduct digital transactions.

Initially, they scheduled the central bank digital currency pilot in 2024 but then after the Russian bank looked for SWIFT alternatives it was moved to take place on an earlier date.